Autoliv, Inc. (ALV) Cash Flow Statement

The OCF/NI ratio of 4.35 in 2026Q2 suggests strong cash generation relative to net income, but the negative ratio in 2026Q1 reveals that working capital swings can overwhelm profitability. This volatility implies that reported earnings may not consistently translate into cash, warranting close monitoring of accruals.

The sharp recovery in FCF suggests that the negative first quarter was likely a timing issue rather than a structural decline. However, the average FCF margin over the last four quarters is around 6.7%, below the 2025Q4 peak of 15.1%, indicating that cash generation remains uneven.

The declining capex-to-revenue ratio may indicate that Autoliv is scaling back growth investments, which could support near-term FCF but may limit future capacity. This trend aligns with the prior income statement finding of R&D increases, implying a shift from physical to intangible investment.

The large positive working capital contribution in 2026Q2 suggests efficient collection or inventory reduction, while the prior quarter's negative swing indicates a buildup. This volatility suggests that Autoliv's cash flow is highly sensitive to supply chain timing, which investors should monitor as a source of unpredictability.

The combination of dividends and buybacks consistently consumes a large portion of FCF, with buybacks varying from $0 to $200M per quarter. This suggests a commitment to returning capital, but the variability in buybacks may indicate a flexible approach tied to cash availability.

The cumulative OCF/NI ratio of 1.59 suggests that Autoliv's earnings are backed by robust cash flows, partly due to significant non-cash charges like D&A. However, the quarterly volatility in working capital implies that this cumulative strength may not be evenly distributed, and investors should focus on the quality of each period's cash conversion.